Patience and Time

Some of my closed friends had started grumbling on the share prices of Hartalega and Allianz, but not Public Bank as they dont own it. In fact, the share prices of Hartalega, Allianz and Public Bank are sideline for months, even though all of them reporting impressive financial results. Every time they grumble to me, i told them to be patient as once the share price go up it will not stop.

Moving of share prices is illogical and irrational in short term, as it purely depend on the "buying interest" of the mass investors, it had nothing to do with the financial performance of individual company. A company can produce a wonderful results but without "buying interest" their share price will be sidelined, until the mass investor realised its potential, then it will be traded at "fair value", after optimistic kicking in it will be traded at higher PE valuation, finally traded at premium when investor priced in the future prospect.

I have mentioned previously that the only advantage a tidy retail investor possess in order to outperform the market is time. To beat the market you need to have patience, if the companies you vested are good then time will be at your side. As Warren Buffett had said "time is friend to good company but foe to average or below average companies". So let time work for you, over a long duration, good company will make more and more money. A company that making more money year after year will "worth" more and more as time will work for it. Or time is money!

A closed check of the financial results is a must to ensure that the companies you vested is good or average only in order for the above principle can be applied. This is a separate issue, not in the discussion today.

A company that is unable to increase their profit over years, an example BAT, it share price hardly can move over years, as time is not working in its favour. Althought it still paying out good dividend, but please construct a discounted cash flow for BAT, it will not be a surprise if you noticed that the future value is lesser that today; even without considering the inflation.

Buy only company that able to grow over a long duration for "time" to work for you.